Excise Duty Hike – The 2025 national budget has landed with a blow to South Africa’s drinkers and smokers. While there’s some relief with no hike in VAT or personal income tax, Finance Minister Enoch Godongwana has delivered a stealthy punch through a sharp increase in excise duties on alcohol and tobacco. Starting July 2025, South Africans will see beer prices jump by R10 per litre, and other liquor and tobacco products won’t be spared either. This budget decision has triggered frustration across households already squeezed by inflation and rising utility costs. The move is part of Treasury’s effort to generate additional revenue without hitting the broader consumer base through VAT hikes. While it’s being defended as a health-promoting and revenue-generating strategy, it’s causing significant backlash, particularly among low- and middle-income consumers. Budget documents reveal that the government plans to collect an additional R6.4 billion from sin taxes in the 2025/26 financial year alone. With inflation already pushing prices upward, this increase could make common leisure activities unaffordable for many. Below, we break down the details of the new excise tax changes, how each category is affected, what South Africans can expect from July, and how the Treasury justifies these adjustments.
New Excise Duty Hike Announced in Budget 2025
The Finance Minister introduced steep hikes on alcohol and tobacco products from 1 July. The aim is to discourage unhealthy consumption while generating crucial revenue.
- Beer: +R10.03 per litre
- Wine: +R1.82 per litre
- Spirits: +R12.49 per 750ml bottle
- Cigarettes: +R1.91 per pack of 20
- Pipe tobacco: +R3.25 per 25g
- Cigars: +R6.89 per cigar
Excise Duty Hike Breakdown – What You’ll Pay Now
Here’s a comparison of current vs new excise duties post-Budget 2025:
| Product | Previous Duty | New Duty from July 2025 | Increase Amount |
|---|---|---|---|
| Beer (per litre) | R52.33 | R62.36 | R10.03 |
| Wine (per litre) | R5.60 | R7.42 | R1.82 |
| Spirits (750ml) | R81.31 | R93.80 | R12.49 |
| Cigarettes (20s) | R20.50 | R22.41 | R1.91 |
| Pipe Tobacco (25g) | R9.70 | R12.95 | R3.25 |
| Cigars (each) | R21.45 | R28.34 | R6.89 |
| RTDs (per litre) | R12.17 | R15.12 | R2.95 |
| Traditional Beer | No change | No change | R0.00 |
Government’s Justification: Revenue & Public Health Goals
The Treasury insists that these tax hikes serve dual goals: deterring harmful consumption and raising funds for public services.
- Encourages reduced alcohol and tobacco use
- Generates R6.4 billion in additional revenue for 2025/26
- Supports public health programs and clinics
- Aligns with global WHO sin tax recommendations
- No VAT or PIT hikes – shifting tax burden to optional consumption
Treasury’s Strategy – Why Sin Taxes Are Preferred
Rather than burdening all consumers with VAT hikes, the government chose to focus on sin taxes to target discretionary spending and risky health behavior.
| Reason | Explanation |
|---|---|
| Health Incentives | Sin taxes encourage reduced smoking and drinking. |
| Targeted Revenue Generation | Narrow focus avoids burdening entire population. |
| Easier Compliance | Easier to enforce than income taxes. |
| Global Norms | Follows WHO and IMF recommendations. |
| Public Support Services Funding | Supports health infrastructure and education. |
Public Reaction: Anger, Disbelief & Economic Concerns
The public response has been swift and emotional. Many South Africans feel betrayed by a budget that claims to offer relief but punishes basic pleasures.
- Working-class citizens say the hikes are regressive and unfair.
- Social media flooded with criticism over “anti-poor” tax design.
- Restaurant and liquor industries warn of job losses.
- Tobacco lobby expected to challenge increases in court.
Consumer Voices – Social Media Reactions
Here are some of the most common sentiments being shared:
| Comment Type | Typical Responses |
|---|---|
| Economic Worries | “I can’t even afford to drink anymore!” |
| Political Critique | “Budget 2025 is another anti-poor trap.” |
| Humor & Memes | “July 2025: when beer becomes a luxury item.” |
| Health Perspective | “Finally some push to quit smoking.” |
Impact on Industries: Alcohol, Tobacco & Hospitality
While the Treasury gains more revenue, industries are bracing for potential losses. Smaller businesses are especially vulnerable.
- Bars and taverns fear reduced foot traffic.
- Tobacco retailers expect a drop in volume sales.
- Hospitality sector predicts shrinking profit margins.
- Illicit alcohol and cigarette trade may rise.
Sector-Wise Impact Table
| Sector | Risk/Impact Description |
|---|---|
| Alcohol Retail | Drop in consumer demand; increased pricing pressure |
| Tobacco Industry | Volume loss; possibility of legal challenges |
| Restaurants & Bars | Fewer customer visits; price hikes to offset costs |
| Local Breweries | Smaller brands may struggle to stay competitive |
| Illicit Trade | Tax evasion likely to increase |
Who’s Affected Most? Low-Income Consumers & Rural Populations
The burden of these hikes will disproportionately fall on the working class. While luxury buyers may absorb the cost, everyday consumers will struggle.
- Lower-income smokers now spend over R650 monthly
- Beer lovers in rural areas feel trapped by rising prices
- Social grants do not adjust to cover leisure inflation
- Many may shift to unregulated or illegal alternatives
Financial Strain on Monthly Budgets
| Monthly Use Case | Cost Before | Cost After | Net Monthly Increase |
|---|---|---|---|
| 8 litres of beer | R418.64 | R498.88 | R80.24 |
| 10 packs of cigarettes | R205.00 | R224.10 | R19.10 |
| 2 bottles of spirits | R162.62 | R187.60 | R24.98 |
| Monthly Total Increase | – | – | R124.32 |
What to Expect Going Forward: Prices, Protests, & Black Markets
From 1 July 2025, South Africans will start to feel the squeeze. Political pushback, retail boycotts, and public campaigns are likely in the months ahead.
Immediate Outcomes and Predictions
- Beer, wine, and spirits will show new shelf prices by mid-July.
- Convenience stores will display updated cigarette pricing.
- Township bars and taverns may adjust opening hours to cope.
- Informal traders may boost illegal sales to offset losses.
- Budget-conscious citizens expected to reduce social spending.
Departmental Contact Information
For inquiries, objections, or guidance on the new excise duty structure:
- National Treasury – Tax Policy Unit
Website: www.treasury.gov.za
Email: [email protected]
Phone: +27 12 315 5111 - South African Revenue Service (SARS)
Website: www.sars.gov.za
Excise Duty Division: [email protected]
Helpline: 0800 00 7277 - Department of Health – Health Promotion Unit
Website: www.health.gov.za
Email: [email protected]
Phone: +27 12 395 8000
While these changes aim to promote better public health and economic sustainability, they do bring added pressure on citizens already battling a high cost of living. Whether this move will reduce harmful consumption or simply push trade underground remains to be seen. As July rolls in, South Africans will be paying more not through income tax, but through the price of a pint or a puff.
FAQs of Excise Duty Hike
Q1. When will the new sin tax increases come into effect?
A: From 1 July 2025, as per Budget 2025 announcements.
Q2. How much more will I pay for a litre of beer?
A: You will pay R10.03 more per litre.
Q3. Will the price of cigarettes increase too?
A: Yes, by R1.91 per pack of 20 cigarettes.
Q4. Are there any changes to VAT or income tax?
A: No, VAT and income tax rates remain unchanged.
Q5. Who can I contact for more information about these increases?
A: Contact SARS or the Treasury Tax Policy Unit for official guidance.